Red, white… and green

Don’t be mistaken: Mike Jackson may be selling luxury cars in the American Sunbelt, but he’d be just as happy putting customers into the newest hybrid. And here’s how he plans to make that happen. By Darren Gluckman

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ike Jackson doesn’t shy away from inconvenient truths. He marched against America’s war in Vietnam—and he doesn’t mince words when discussing its current wars; he ditched legal briefs for overalls; he o ers short-term career advice to Tiger Woods; oh, and he advocates for higher gas taxes. at last bit might sound odd, considering that, as chairman and CEO of AutoNation, America’s largest network of automotive dealerships (over 8 million vehicles sold to date), he is the country’s leading car salesman. “We view ourselves as the voice of the customer to the manufacturers,”

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Mike Jackson

PROFILE

“We view ourselves as the voice of the customer to the manufacturers.”

PHOTO BY BRIAN SMITH

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Mike Jackson
he says, although Jackson is clearly more than just a mouthpiece. He has a vision about where to go, and he wants his customers to follow. Higher gas taxes would presumably hit them where it hurts. But while 60 percent express an interest in hybrid vehicles, and while every manufacturer o ers them, only 2.5 percent of Jackson’s customers leave the dealership in one. “We’re there for the moment of truth,” he says, “when the customer has to write the check.” And it’s a simple, back-ofthe-envelope calculation for most prospective car buyers: Given the relatively low cost of gasoline, it takes too long in accumulated fuel savings to o set the premium in the price of the vehicle. e technology doesn’t come cheap. Keeping the cost of gas high, on the other hand, would maintain the incentive for drivers to make the opposite calculation and thus for manufacturers to increase production. ere is no question that fuel-e cient vehicles are, at present, more expensive than their less e cient counterparts, but two factors have now converged to give hybrids and their ilk a ghting chance: technological advance and consumer desire. On the rst point, Jackson states that, contrary to one fashionable conspiracy theory, “General Motors did not kill the electric car 20 years ago. e battery killed the electric car 20 years ago.” In other words, the technology wasn’t up to par. e battery of 20 years ago was perhaps suitable for a golf cart—this is no longer the case. Highly fuel-e cient and alternative fuel-based vehicles today are capable of performing in line with customer expectations. “We really are on the cusp of a technological revolution in terms of how cars are moved,” he says, citing electricity, natural gas, diesel, and “tremendous advances in the internal combustion engine.” Indeed, the industry is poised to improve fuel economy from today’s vehicle average of 24 miles per gallon to a targeted 35 mpg by 2015. But while, technologically, the industry may be at a “100-year in ection point,” it is that tricky second factor—consumer desire—that threatens to gum up the gears. Asked about the role of auto-sharing companies like Zipcar, he says, “I think it’s a wonderful niche, but it’s a tiny niche. A unique solution in certain urban markets, it’s never going to be a signi cant part of the marketplace.” Why not? “ e automobile is a unique American expression of individual freedom.” And while Americans are a generous people, he says, asking them to share their automobiles is, beyond that niche market segment, a nonstarter. Jackson argues that the vast spread between the per32
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centage of customers genuinely interested in fuel-e cient vehicles and those who actually purchase them is largely tied to the price of gasoline. As long as gas remains cheap (Europeans pay about twice as much per gallon as Americans do), customers are less nancially motivated to invest in fuel e ciency. And at present, even where they do, overall consumption remains high. “Here is the irony,” he observes, with the slightly exasperated air of someone trumpeting an unpopular idea. “If we as an industry improve fuel e ciency and you don’t change the price of gas, then the cost per mile driven goes down; therefore, people drive more.” Americans, he notes, are living in homes that are 30 percent bigger than they were 20 years ago (thus incurring higher energy bills), and driving vehicles that are also 30 percent bigger (thus requiring more powerful engines) in the course of longer commutes to and from work (thus requiring more gasoline). e inconvenient truth, as Jackson asserts several times in the course of a conversation, is that “just improving the fuel e ciency of the vehicle does not in and of itself address social responsibility issues.” On the other hand, he states that “if you tax gasoline, then the consumer is going to value fuel e ciency, both in terms of how they use the cars they already have and the type of vehicles they buy,” leading to an overall decrease in gasoline consumption. Why does this matter? More speci cally, why does this matter to Mike Jackson? He was on vacation in the summer of 1971 when his 1959 Mercedes SL broke down in Hyannis Port, Massachusetts. Without the money to pay for repairs, he o ered his services to the local Mercedes dealership in exchange for help with the car. Planning to enter law school that September at Georgetown University, he grabbed a broom and did what was required as the low man on the totem pole. But by summer’s end, he had developed a real interest in— and aptitude for—automotive mechanics. To his parents’ chagrin, he decided to delay law school for a year. A year turned into a lifetime. But this about-face wasn’t the result of an epiphany, or the owering of some adolescent fascination with cars. Not at all, he says. Rather, it was “a salami decision. One slice at a time.” And so, several slices later, he wound up buying his own dealership at age 29, eventually becoming CEO of the Mercedes-Benz North American operations. ere, facing declining sales gures and an iconic name that had begun to be perceived as staid and even a bit stale, he reinvigorated the brand by cutting prices, introducing new lines, and—

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Mike Jackson
against the nervous inclinations of the head o ce in Stuttgart—he deployed irreverent ad campaigns, including one that made use of the Janis Joplin song Mercedes Benz. In 1999, Jackson was recruited by H. Wayne Huizenga to AutoNation. e company, with about 19,000 employees, has over 200 dealerships, mostly concentrated in the American Sunbelt: California, Nevada, Arizona, Texas, and Florida. is focus is based on demographics—there has been and, the company believes, there will continue to be higher growth rates in this region—but Jackson, who grew up in Philadelphia and spent years in New York, makes no bones about enjoying the temperate climate. “ e Northeast can wear you out.” And what does the King Kong of car dealers drive? A compact, low-emission Fiat 500. (OK, his other car is a Benz, a sleek, black CL 600.) that impacted all Japanese imports earlier this year. AutoNation had to completely revise its 2011 business plan, but Jackson remains con dent—enough to have recently allowed a reporter to sit in on the company’s daily meeting with top executives and regional managers. At 62, and “on the move,” he’s determined to keep AutoNation out of the rough, on the fairway, and with a good look at the green. And speaking of green… “I love America,” he says. “Doesn’t mean America gets it right every time.” He’s talking about Vietnam, and explaining his 1969 run-in with the National Guard while marching on Washington. But he’s no peacenik. e proud son of a father who served in the Navy as a pilot during World War II, he supported the U.S. invasion of Afghanistan. “It’s from where we were attacked and it had to be ad-

Exporting hundreds of billions of dollars of American capital each year because we don’t have a coherent energy policy is wrong. What we’re doing is unsustainable.
He says his reputed interest in golf is overblown; he only makes it out to the links a few times a month, though he does admit to a rigorous exercise schedule (twice a day) and sensible diet. e business is open 364 days a year, with East Coast stores opening at 7 . . and West Coast stores closing at midnight their time. Accordingly, staying healthy is a priority. “You only get one body from the Lord above,” he says, “and you better take care of it to give yourself the best chance you can.” Returning to the golf front, he’s bullish on Tiger Woods’s successful return to the game. “ ere’s no question he’s coming back,” Jackson o ers, suggesting that Tiger take the rest of the year o to return to mental and physical health. But Tiger isn’t the only one who has experienced recent setbacks. e entire automotive industry has su ered a number of signi cant blows, starting with the recession that began in 2008, continuing with the recall issues affecting Toyota in 2010, and culminating in the tsunami
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dressed,” Jackson surmises. Iraq, on the other hand, he calls “a huge strategic mistake.” As for the country’s current imbroglio in Libya, he declares it a close call. He explains, “America’s military might is dependent upon the strength of the U.S. economy. e U.S. economy is struggling and has huge challenges. e U.S. military is overstretched from 10 years of wars. To start a third one, you need to really think long and hard.” And it’s this love of country that has helped shape his position on fuel e ciency. Indeed, in a broad-ranging discussion on the issue, global warming barely rears its head. Rather, national and economic security, and the extent to which both are imperiled by American dependence on foreign oil, seem to animate Jackson’s approach to all things green. “Exporting hundreds of billions of dollars of American capital each year because we don’t have a coherent energy policy is wrong,” he states atly. “What we’re doing is unsustainable.”

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Mike Jackson
In his view, two things need to occur simultaneously. America needs to produce as much of its energy domestically as possible. For this reason, he supports responsible oil exploration in Alaska, the American West, and o shore drilling. He notes that domestic natural gas production has soared in the past decade because the industry continued to invest in exploration and related technologies. But dependence on foreign oil is an addiction that no American political leader has been able to break. “On this issue you can go all the way back to Eisenhower,” he notes. “President Eisenhower said that America’s dependence on imported oil was an issue of national security. At that point, America imported 20 percent of our oil. Now we import 60 percent of our oil. Why? ere is the expectation in America that Americans have a divine right to cheap oil.” is is, he says, one of the third rails of American politics. “Our political leaders,” he observes, “have a great deal of di culty talking about personal responsibility.” And this leads directly to the second factor that Jackson believes is necessary in order for the country to correct its course—its citizens need to change both the way they drive and the types of vehicles they buy. Ultimately, they need to consume less gasoline. “I make the decision to live vertically, close to where I work,” says Jackson. “I have a short commute.” He lives in what he describes as a highly energy-e cient apartment of modest square footage, three miles from his o ce. is is, he says, “one of the most green-friendly ways you can live.”
PHOTO COURTESY OF AUTONATION

PROFILE

But he is adamant that in order to encourage drivers to adjust the way they consume gasoline, higher gas prices are necessary—not periodic spikes as a result of uctuations in supply, but levels consistently regulated through taxation. e result, he asserts, will provide the economic incentive that his customers need to invest in fuel-e cient vehicles. As more of them do, and as adoption rates increase, the cost of the technology will inevitably decrease. Consumption will fall. Dependence on foreign oil—especially if domestic reserves are tapped—will decline. And a measure of security and sustainability will return to the battered American economy. In Mike Jackson’s view, green is just another word for red, white, and blue.
FALL 2011 LIFESTYLES MAGAZINE